Posted
by
samzenpuson Thursday July 17, 2008 @07:57AM
from the please-die-already dept.

CrkHead writes "Groklaw has posted Judge Kimball's ruling on SCO v Novell. For those that have been following this saga, we finally get to watch the house of cards start to fall. For those new to this story, it started with SCO suing Novell and having all its motions decided in summary judgement and went to trial only on Novell's counter claims. Cheers to PJ for keeping us informed!"

So what happens to those in SCO that initiated this case in the first place? If they are not able to appeal nor pay up on what has been ordered, what happens to Darl and co? Claims were made to be found baseless, do they get off free of charge or are there proceedings that can be brought against the architect's of this situation?

Well, let's hope that no one is ever stupid enough to hire anyone from SCO's management team again. They should instead be employed where their talents clearly lie, in human waste management (no offense to those in that profession now intended).

Deciding that you should change your company's primary product from something that is useful (software) to something that is a leech on others (lawsuits) is moronic. Then suing not only your competitors, but your customers is even MORE moronic. Doing all of this while having no case is even more so. Realizing your stupidity halfway through but then continuing to fight in every way possible just throws stubbornness after stupidity. I only wish there was a way to put the SCO team into prison for their actions, because the malice they showed clearly deserves it...

Let's hope this cautionary tale prevents any other company from being so imbecilic in the future.

technically, yes. All they need though is enough money to appeal, the payment will probably be stayed during the appeal. So, it isn't over yet by the looks of it. Rumours of SCO's demise have been greatly exaggerated to date, they won't be dead until they're staked through the corporate heart with a wooden stick or shot with some silver bullet. See your nearest vampire/zombie movie theater for more information about this procedure...

I believe they are required to deposit an appeal bond in the amount of the judgment before they are allowed to appeal. They may still be able to manage that, but it's most likely going to be a matter for the bankruptcy judge...

Theoretically, SCO does have a couple of million left, and SCO should have to pay Novell. Since this is not a judgement of debt owed, but of conversion of Novell's money, Novell should be in front of the line and get their money before the others split up the remaining. Delaware jurisdiction makes this less likely, though.It may be possible to go after the company executives, but not the stockholders, who have lost their entire investment already, anyway.

Novell should be in front of the line and get their money before the others split up the remaining. Delaware jurisdiction makes this less likely, though.

With any luck that should mean the books will stay in the red. With a debt hanging over the company that should chase off any future "investors". The money should simply bounce right out of SCO's account and go straight to Novell.

Erm, no. That's the whole point of being a public limited liability company: in exchange for capping your liability to what you invested, you have to open your company up to a certain level of scrutiny.

Sure, that is, if you use metric conversion and not imperial conversion. Imperial conversion is pretty easy, you take the dollar amount you have and then invade the country you want to convert your money to, subtract the head of state, add a puppet government and then multiply by the compound interest they owe for the weapon system you financed them +/- any collateral damage and/or hush money.

So Novell get $2.5m instead of $20m, does this mean SCO may survive this?

"Importantly, the court ruled that Novell has no right to any royalties from UnixWare or OpenServer sales by SCO, which is where the bulk of SCO's revenue is earned," SCO said in the statement. "This is also an important step forward in the capitalization and reorganization plan for SCO that will allow us to emerge from Chapter 11. We continue to disagree with the premise of this trial and believe that Novell is not owed anything, but that they have interfered with SCO's UNIX rights."

From their statement they seem relatively upbeat on what must of been a bad day for them.

It hints that Novell owns the SVRX code that SCO sold to MS - does this mean that MS will now sue?

oh, they'll appeal for sure. FUD forever. The really nasty thing is that this ruling sends entirely the wrong message to other SCO-like scum out there. They should have been hung and quartered, instead they only got slapped around a couple of times. The players all made money (except for the parties sued of course).

It seemed that the judge made it quite clear that he was tilting the ruling in SCO's favor. He explained precisely why he was legally compelled to determine the dollar amount in a way that was favorable to Novell (agency, burden of proof, blah blah blah). But then he turned around and pulled out a dollar value that was generous to SCO. It was practically a roadmap to Novell showing how they could get millions more if they appealed (not that they are likely to receive a penny anyway). I read it that he was sending a message to SCO that if they appealed they would be most likely to lose significantly more money.

But Judge Kimball just said that the burden of proof that the UnixWare or OpenServer sales are also in fact SVR4 lies with Novell, and until now Novell didn't prove so. This US$ 2.5 mio are just those royalties on sales that are undisputedly SVR4 sales. It still leaves Novell with the possibility to appeal where they actually prove that those sales aren't what SCOG claims them to be.

The ruling that sent the SCOundrels into bankruptcy court last year confirmed that the deal Caldera inherited from Santa Cruz Operation did *NOT* transfer copyrights from Novell, just gave rights to develop new code from it (i.e. Unixware) and act as Novell's collection agent on existing licenses. The current management (using the term *VERY* loosely), seeing their x86-UNIX business sinking, sued their former development partner, IBM, assuming they'd get a quick payoff to shut up and go away. Big surprise when IBM unleashed their lawyers right back at them. The present fiaSCO has ensued, only getting better when they tried to sue Novell for actually claiming the copyrights SCO was trying to use, which led to today's ruling.

"seeing their x86-UNIX business sinking, sued their former development partner, IBM, assuming they'd get a quick payoff to shut up and go away. Big surprise when IBM unleashed their lawyers right back at them." is _weird_ plan, considering that IBM actually prided itself on not giving in to such claims. IBM's lawyers have been at various times compared to the Nazgul, or it was claimed that IBM could darken the skies with them. And it's shown before that it's not affraid to use it. In fact, that it makes a point to use them to maximum devastation effect, to discourage other parasites from trying to extort them. It's not even a matter of conjecture or correlation, it's IBM's policy.

So hoping that IBM would just fold down is... surrealistic. It's a bit like me taking my scrawny nerd ass to the heavyweight boxing champion and going, "hey, pretty boy, hand over the wallet or I'm punching you in the nose." And hanging around to insist on it, instead of scramming while he's laughing his ass off.

And if it were just Darl, I'd probably reach for good ol' Hanlon's Razor: "Never attribute to malice, that which is adequately explained by stupidity." But his legal council also seemed to have no problem with it, and at least two different investor groups paid good money to fund this farce. Even if it were just PHBs who got wooed by being shown "#include " lines as infringing code in Linux, they have legal departs they can go and ask first. It just doesn't add up.

Were those contracts _that_ ambiguously written, that _nobody_ knew who really owns Unix until a judge scratched his/her head and decided it? I doubt it.

So I'm wondering what was the _real_ game there. The whole legal farce was probably just means to the real end, or maybe just a diversion. So what was it? Who made a buck out of it, and/or who paid for this expensive distraction?

Given the money funneled in from Baystar on the recommendations of someone at MS, given the barely-disguised FUD money paid by Sun, who at the time were in one of their Linux-is-TEH-3V1L! phases, the idea of claiming Linux was encumbered and Not Suitable for Business was pretty obvious. Recall this was also the time of the attempt to show Linux was a ripoff of Minix by the opinion-for-hire deTocqueville Institute [wikipedia.org], whose funding also came in large part from MS. The money they threw SCOX to make Linux look bad was chump change. This provided them material to point their potential defectors-to-Linux at with arms-length deniability.

What they apparently didn't plan on was the strength of the grassroots response from the developer community to undo the PR spin. If anything, the result has been to strongly validate the Linux ecosystem as a safe bet.

Wait there's more. The 2.5 million did not include attorney's fees or interest. I would expect Novell to ask for attorney's fees for this colossal waste of their time. Also it doesn't hint that Novell owns Unix rights; Judge Kimball already ruled that they own the rights otherwise he would not have opportunity to award money.

SCO rhymes with 'no'. And the fact that it's Bill Gates as Darth Vader and not actually Darth Vader should give you an idea that this might not be a direct quote. Unless perhaps in your own language, SCO is pronounced 'Luke!'

Judge Kimball noted in this ruling that all of the evidence SCO submitted against IBM corresponds to code that SCO doesn't own. When/if the IBM case starts up again (not sure how this works with the bankruptcy) it is probably all over except for determining how much money SCO owes IBM.

The whole thing has been a farse from start to end. That SCO has been allowed to continue this long without any evidence to back their claims up are insane. At the very least they should have been compelled to show some tangible evidence before the whole fishing expedition begun. The real stink begun when they could go on even after the extremely deep discoveries couldnt show any evidence at all that any code whatsoever came from SCO, not even "their own" code.

Something is just fishy about how the court system has handled all this.

Not at all. IANAL, but from personal experience with involvement in such a legal dispute, I wouldn't say that discovery was anymore deep than normal. The only difference is, SCO dragged their feet and dragged their feet as much as possible. But in so much as what was asked for? Not really unusual at all. The way Judge Kimball and his magistrate handled it? Nothing unusual there, either. If anything, Kimball has been one of the most fair judges I've ever seen.

You can't just stop a court trial for no reason. The judge can't just throw the whole thing out. There are rules that have to be followed and Kimball did, in essence, throw out the vast majority of SCO's claims.

In fact, most of what's left is IBM's counterclaims. That's when the hammer will really fall.

SCO has used every trick it could to delay both the trial and discovery. Unfortunately they have been well within their rights. I would suspect that the judges in this case know this but are just being cautious. They don't want to give SCO any valid excuse to overturn them on appeal.

After this lengthy ordeal, Kimball ruled that Novell owned the rights and Wells threw out most of SCO's claims against IBM for lack of evidence. There has been progress made but it's been slow. The of course, SCO further de

Actually a Jar-Jar Binks 'Ham' sandwich would be very tasty right now...I couldn't think of a better fate for him than to be 'deep basted' with up to a 10% salt solution, chipped, pressed into vaguely ham-like shapes, and cooked in greasy water.

Well, as the usual excuse goes: free will. Humans are allowed to decide for themselves what they want to do, even something evil or bloody stupid, so Lucas too can decide to unflict Jar Jar upon millions of innocents;)

If you can't see a reason for something, the reason is most probably the money. Someone else must be making more $ for every some $ from SCO. IANAL and I don't care who or how much, but it sounds like the only reasonable explanation.

I remember reading the latest SCO headlines when I was in the college computer labs back in 2003. I thought, "It's amazing that this has gone on so long... surely it will end soon." Five years later, it seems like lifetimes ago. Now, I doubt that this will ever end.

The first series of lawsuits by SCO are the ones that are to answer the question of whether linux, BSD or contain code from the real UNIX code (i.e. code originally created by AT&T)The second set of lawsuits (mostly being fought between SCO and Novell) is to answer the question of who owns the UNIX copyrights, who has what rights to them and which of the deals done over the code are valid and which aren't as well as who owes who how much money

Since SCO and Novell both had real lawyers who thought they were on the winning side of these arguments, I don't think it's fair to judge PJ too harshly for only being partly right with limited information.

SCO got off easy... this time. But the next shoe to drop will be if Novell sues Sun over OpenSolaris and Sun invokes the indemnity clause in its agreement with SCO. Then SCO will be on the hook.

The current judgment of $2.5M is practically nominal in the big picture. A large investor could cover that and SCO would escape a death sentence. SCO, or some version of it, is likely to survive for another day.

This is likely bad news for OpenSolaris and Sun. Novell now has Sun over a barrel. Sun was able to open source Solaris because it thought it bought a license from SCO to have free-and-clear rights to the SysV parts in Solaris. According to the decision, in 1994 Novell & Sun agreed for a 20-year non-disclosure on release of UNIX source code. That runs out in 2014. SUN then amended this with SCO to remove the non-disclosure. The last sentence on page 20 of the decisions says, "Absent the removal of the 1994 Sun Agreement's Confidentiality restrictions, Sun would not have been licensed to publically release the OpenSolaris source code". And on page 36k "In the 2003 Sun Agreement, SCO renegotiated a contract and expanded Sun's rights to technology still owned by Novell". Later on the same page "The court thus concludes and declares that SCO was without authority to enter into the 2003 Sun Agreement....".

Novell now has a HUGE stick to beat over Sun's head. OpenSolaris has basically been declared illegal.

If I remember correctly, Novell has declared that they are done suing over UNIX. So Sun might be off the hook. However, if Novell is not so gracious and sues Sun over OpenSolaris. Sun will loose and will seek for SCO to indemnify it. SCO won't have the money. Then SCO will finally die.

The PR damage to Novell's open-source customers from "Novell sues Sun for releasing OpenSolaris" would be substantial--more harmful to their reputation than the potential money they might collect here. Having gone through the PR wringer after their deal with Microsoft, I would doubt Novell wants to look like the bad guy here again. SCO will fall apart quite nicely without needing to do that.

I suspect SUN and Novell will reach an amicable agreement. I think SUN may turn around and sue SCO to recoup the money SUN spent on licenses SCO wasn't entitled to sell. Fraud, barratry, and other charges may be possible.

Novell unambiguously owns the copyright to SVRX Unix as a whole. They just as clearly do not own copyright to each line of code individually. Some undetermined amount of it is covered under copyrights that expired or were not registered properly or whatever. If Novell wanted to beat Sun up over opening solaris, they would have to start doing intense historical investigations of every single line of code to determine whether is covered under a valid copyright

SCOsource also open sourced "Ancient Unix" [wikipedia.org]. This supposedly unencumbered the orginal classic vi, which is widely used (according to the oracle of true that is wikipedia). Now it might be encumbered again. Time to check the CVS repositories and see which version you are shipping.

Fourtunately, there are lots of libre free alternates (like nvi and vim).

For those that have been following this saga, we finally get to watch the house of cards start to fall.

Start? I thought the house of cards fell in early 2003. That's when the lawsuit dropped, and at that same moment most of the employees of SCO and about 75% of the world's clueless tech pundits mistook conjecture and cognitive dissonance for business wisdom and impending legal victory. The rest of us started laughing at this charade almost immediately. But then, we read the facts.

What I really want to know at this point is what the oh-so-knowledgeable and unbiased expert analyst Laura DiDio has to say about this. After all, she had seen code snippets that made her come away thinking SCO really had a strong case. Later she said that "you'd have to be really crazy to try and sue IBM if you didn't have something."
Since she has also claimed "these people" (people involved with Linux) are "living in an alternative reality," I'm curious about Ms. DiDio's views on reality today.

Of course, I have to admit that Ms. DiDio, renowned IT expert with no IT or computer science training, does know something about "living in an alternative reality [go.com]" (Ms. DiDio's part comes at the top of the 2nd page).

Yeah, at least Fake Steve himself, Dan Lyons, admitted that he was conned [forbes.com]. I don't recall reading a similar mea culpa from DiDo.

I really appreciated Lyons' article. I still think it was stupid to buy into SCO's claims in the first place: there was a little matter of an absence of evidence, and the company's excuses for not releasing clear proof of code pilfering were sadly flawed (The Linux people will just destroy the evidence by removing it!). But Lyons' admission of error made it possible for me to r

Judge Kimball probably gets the law right (IANAL) but his idea for calculating damages is strange. He says Sun paid SCO for 4 things: a "release", as well as a license to UnixWare, some drivers, and Unix (SVRX). He values the release at $1.5M since MS paid that amount for a similar release. He then values each of the three licenses at one third of the remaining payment each. At no point does he justify this methods of calculation, which are a major win for SCO:

The main thing Novell wanted was a judgment saying that they owned the copyrights. They didn't want any cloud over their Linux offerings. That was decided long ago.

Other than that, Novell didn't want this to drag on. Should they have spent months of time and millions of dollars on lawyers dragging Sun into this? At most they would have been awarded a few million more dollars, which they probably will never get anyway.

Remember that Novell dropped a bunch of claims they could have won easily just to mak

What the judgment does is to set the amount of money SCO owes to Novell. That information goes into the bankruptcy.

An important detail is that the money SCO owes Novell was never SCO's. SCO was handling the money as an agent. It was always Novell's money. Judge Kimball ruled that SCO had breached its fiduciary duty and had unjustly enriched itself. If I understand correctly, that means Novell gets its money and then the other creditors get to fight over what's left.

The other thing that many have pointed out is that Novell will probably be awarded their lawyer fees. That amount will far eclipse the money Kimball has ruled on so far.

Under UK law (and I realise that this is a US case), the claim for legal fees could be pursued back to SCO's backers. There is a concept of "constructive support". If A gives B a pile of money to legally harass C, and the court finds that B's claim is substantially without value (which seems to be the case here) and awards costs against B to C, then C can chase A for those costs if B cannot pay. There is an obvious reason for this: you should not be able use the law as weapon against others with a fall-guy

But under english law, are financiers of the company itself really involved in champerty or maintenance? Isn't there a big difference between funding a third party's lawsuit and actually buying an interest in the third party in question even if the effect is to give the third party the funds to pursue thte lawsuit?

As I (and IANAL) understand it, no. Either someone who loans/gives money to the litigant, or someone who obtains a significant (but not necessarily controlling) interest in the litigant, if the effect is as described, can be regarded as a party to the case and thus civilly liable for the legal costs. Of course, there is a burden of proof: the backers could claim that they were buying into SCO's normal operations and not, intentionally, into the lawsuit. The burden of proof of this would be on the complainan

More specifically, the judge found SCO guilty of Breach of Fiduciary Duty, Conversion, and Unjust Enrichment.

Section 8.1 of the 2003 Sun Agreement lifts the confidentiality provisions with respect to 30 versions of SVRX technology granted to Sun under its 1994 Buy-out Agreement with Novell, specifically stating that it "amends and restates" Sun's 1994 SVRX buy-out agreement with Novell. SCO had no authority to enter such an agreement.

Section B of Amendment No. 2 to the APA provides that before entering into

What it amounts to is a fancy way to describe theft. SCO stole money from Novell by not reporting it and turning it over. I would *love* to see SCO's management face civil and/or legal penalties directly for this but IANAL.

The bankruptcy trustee, along with Novell and some of the creditors, objected, and SCOX folded, especially when the terms of the deal showed that $95MM of that amount was in fact a loan (which they'd pay back how?). SCOX said they were going back to renegotiate the deal, and nothing more has been heard about it. Groklaw link with questions about SNCP [groklaw.net], and the report of the hearing [groklaw.net].

This case should have been shutdown five years ago. SCOX has *NEVER* shown any infringing code, has been shown *NOT* to own the copyrights they're claiming were infringed, has dragged out all of the countersuits, and then ran to the BK court when the rulings all started falling against them. MS and Sun have kept the corpse propped up and twitching in an attempt to keep folks from jumping to Linux on commodity x86 hardware and detracting from their market.